Hitting the brakes

As I noted in a story last week, there’s some significant pullback developing in terms of truck orders as many fleets seem to be hitting the brakes on equipment replacement and expansion efforts – if not entirely squelching them altogether.

Though not everyone is in agreement that the prevailing economic winds are shifting south – Bob Costello, chief economist for the American Trucking Associations (ATA) is just one who believes things in aggregate are still “looking good” in his words – many truck makers themselves are beginning to lower their production forecasts.

[You know, I’ve already depressed myself just writing those opening paragraphs. So I am going to revisit the 2012 Mid America Trucking Show for a minute here and watch the “nighttime judging” of all the custom rigs competing for “pride and polish” bragging rights.]

In Paccar’s first quarter earnings report, Harrie Schippers, DAF’s president, said estimated industry sales in the above 16-tonne truck market in Europe this year will now be in the range of 210,000 to 230,000 units, versus 241,000 in 2011.

“This reflects a market that is being impacted by economic challenges in the Eurozone,” he explained. “European truck manufacturers have reduced build rates as well as scheduled factory shutdown days to reflect the lower market.”

Dan Sobic, Paccar’s executive vice president, noted that while U.S. and Canadian Class 8 sales should be higher in 2012 vs. 2011, those numbers only reflect ongoing replacement of aging equipment and not a broader fleet expansion.

"U.S. and Canadian industry retail sales in 2012 are expected to increase from 197,000 last year to a range of 210,000 to 240,000 vehicles, driven primarily by the ongoing replacement of the aging truck population,” he explained.

Yet annual replacement demand for the U.S. and Canadian truck market is estimated to be approximately 225,000 units, added Sobic, so Paccar’s forecast includes the chance that volumes may actually fall below replacement levels this year – an indication that a more significant pullback in orders could occur.

“The gradual recovery of the truck market reflects an economy that continues to experience high unemployment rates and a low level of housing starts and construction activity,” he said.

Carriers themselves are starting to see evidence of this downshift in equipment orders as well – a trend most recently noted by Paul Will, president and COO of Celadon Group, in his company’s first quarter earnings statement.

“There are a significant number of fleets that have experienced poor financial performance during the recent past, which has resulted in their inability to refresh their fleets, resulting in a significant increase in fleet age,” he explained.

“This has allowed us the opportunity to make strategic acquisitions, which results in an increased driver fleet at a time when capacity is exiting the marketplace,” Will added. “This should position us well to continue to grow our fleet and service offering in a truckload market that is becoming capacity constrained.”

Well, at least if capacity is constrained, truckers should be able to make some long-overdue rate increases stick. Guess you must appreciate the bright spots where they shine.

As I noted in a story last week, there’s some significant pullback developing in terms of truck orders as many fleets seem to be hitting the brakes on equipment replacement and expansion efforts – if not entirely squelching them altogether, seo zen review, covert viral wizard review, wireless gaming mouse

This immediate commitment regarding senior management as well as participation regarding employees in the development regarding workplace well-being policies are a vital prerequisite to your successful execution of policies that could address the exact needs on the working local community.